Where's the beef? EU at odds over farm trade offer to Mercosur

BRUSSELS, Sept 29 (Reuters) - European Union countries are struggling to agree on how much beef they should in future let in from South American bloc Mercosur, threatening to derail trade talks that the two aim to conclude by the end of this year.

The talks between the two blocs, which started in 1999, have ground to a halt before but both sides have committed to reach an initial deal in 2017, with steady progress since discussions resumed last year.

The European Commission, which negotiates on behalf of the 28 EU nations, had proposed including beef and ethanol in an offer to Mercosur in 2016, including a tariff-free 78,000-tonne annual allotment of beef.

However, both were removed because they were deemed too sensitive for beef-producing EU countries such as France and Ireland.

The Mercosur countries of Argentina, Brazil, Paraguay and Uruguay have said an offer without beef in particular cannot lead to a deal. The expectation was quotas would be added in for beef and ethanol in a new offer presented at talks in Brazil next week.

A meeting of EU trade representatives to discuss the new offer was set for Monday, but pushed back until Thursday. They did not reach an agreement, with talks to resume on Friday, EU sources said.

The EU recently completed trade agreements with Canada and Japan, and hopes for a deal with Mexico as well as Mercosur. It has argued such deals boost economic growth for both sides.

However, the prospect of allowing tariff-free quotas for some of the world’s largest producers of beef and sugar, which is turned into ethanol, has rattled some EU members.

A group of countries led by France and Ireland have proposed postponing the offer, saying they were particularly vulnerable to imports of beef, ethanol, sugar and poultry.

“I‘m very much in favour of a trade deal with Mercosur, but I would like to see standards protected and our beef farmers protected as well,” Irish Prime Minister Leo Varadkar told reporters at a summit of EU leaders in Estonia on Friday.

Gaining access to public contracts in the Mercosur bloc, a market worth some 150 billion euros ($177 billion) in Brazil alone, is seen as an unmissable prize by others.

Germany, Italy, Spain and five other countries wrote to the European Commission urging it to make a good offer to Mercosur, according to a letter seen by Reuters.

“Any positive gesture from the EU could prove decisive for encouraging Mercosur to put together a more generous offer,” the countries said.

A deal would allow the EU to “reap economic benefits in areas such as services, investment, public procurement and intellectual property”, the letter added. ($1 = 0.8475 euros) (Reporting by Robert-Jan Bartunek; Additional reporting by Philip Blenkinsop and Alissa de Carbonnel; Editing by Philip Blenkinsop and Dale Hudson)